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Four Macro Trends Snack Food Manufacturers and Retailers Can’t Ignore

by Sally Lyons Wyatt, IRI

Have you had any snacks yet today? I’m guessing yes, as snacking throughout the day is more popular than ever. In fact, during 2017, 14.2 percent of the U.S. population has reported snacking five or more times per day.

While snacking occasions continue to increase, snack food manufacturers and retailers need to be aware of some relevant macro trends that are impacting whether consumers buy a brand or leave it on the shelf. By being aware of and leveraging these trends, companies can take the right steps to excite consumers and drive additional sales.

1) Snack food channels are expanding.

There are now many more places where consumers will consider buying snacks, and this has shifted significantly in just two years. For example, quick-serve and limited-serve restaurants are now within consumers’ consideration set for snacking. In 2017, 42 percent of consumers reported going to quick- and limited-serve restaurants one to two times per week (up 3 percentage points versus 2015), while 11 percent went to these establishments three or more times per week (up 4 percentage points versus 2015).

What’s the reason for this jump in sales? Quick and limited serve, as well as other new specialty shops, are offering different types of snacking choices at various times of the day. They are also taking steps to be more engaging and are able to capture the on-the-go consumer because they can be where that consumer is and command “the demand moment” (based on who they are, who they are with and what time of day it is).

2) Healthy benefits matter more than ever.

Holistic health plays a role in not just how consumers eat, but also how they snack. It is no longer enough for manufacturers and retailers to communicate benefits with consumers – they need to take it further and have those claims verified or certified in order to earn consumers’ trust. Nearly 60 percent of consumers want additional health benefits beyond nutrition, such as antioxidants, vitamins or minerals.

Consumers who seek health benefits from their snacks also want to buy products from companies that are transparent about the ingredients used in the food, the packaging it comes in and where it is made. Retailers and manufacturers that want to win with healthy snacks should give consumers a more open view of their products and process.

3) Snacks are moving online.

E-commerce is exploding, and IRI data shows that 50 percent of CPG category market growth will be online by 2018. While e-commerce sales for snacking currently have a small base, they are showing strong dollar trends. For example, in 2017, salty snacks sold online are already up 35 percent ($183 million dollars YTD), while granola bars are up 10 percent ($416 million dollars YTD), and snack nuts are up 23 percent ($90 million).

For companies that are apprehensive about taking their product online, an analysis by IRI, BCG and Google shows there will be a tipping point for online snack sales between 2017 and 2022. During the next five years, once retailers reach 5 percent of sales online, the timeframe to 10 percent will significantly decrease. If retailers do it right, they can expect to see incremental growth online without cannibalizing their brick-and-mortar sales.

4) Innovation is crucial.

In 2016, innovation created to snack food growth. From packaging to flavors, the blurring of categories to new product forms, consumers’ desire for innovative snack products has become critically important.

For example, within the natural channel, IRI and SPINS have identified three snack trends that have and/or will contribute to growth in 2017 and 2018, including:

Portable Snacking – This is evolving with convenient snacks in forms such as detox popsicles or probiotic-rich cheese to entice shoppers.

Continued Explosion of Meat Snacks – Meat snacks have continued to grow. Moving forward, marketers should branch out with kid-geared products or tout no-waste, snout-to-tail usage or even women-targeted options.

If you are a snack food manufacturer or retailer, there are several ways you can leverage the trends above. To address consumers’ increased interest in health, communicate ingredients and sourcing in simple ways, identify trends within the natural channel that could be taken mainstream and embrace holistic health. Innovative packaging must be part of your portfolio, and companies should consider innovating both in and out of a category to take advantage of different channels. E-commerce offers huge opportunities, so develop and/or enhance your e-commerce strategy to gain a larger share of the expected growth in this channel. Finally, take one-to-one personalization to the next level. Consumers expect more individualized messages, and they are willing to share information about themselves if companies use that information in ways that are helpful to the consumer.

Companies that take these steps will be in the best position to succeed in snacks in the near future and beyond.